Network Effects: the Entrepreneur, the Investor, and the Poor in Bangladesh

Two months ago, the Bill & Melinda Gates Foundation closed on its first ever international direct equity program-related investment (PRI), with a company called bKash in Bangladesh. In the countries where our Financial Services for the Poor team focuses, it is a very exciting time to witness the transformative potential of mobile money combined with the enormous contributions made by technology entrepreneurs.

Kamal Quadir and Iqbal Quadir are two Bangladeshi brothers, and serial entrepreneurs. Iqbal started the first and now largest cellular company in Bangladesh, GrameenPhone. Kamal built a successful technology company in Bangladesh, CellBazaar, which provides a virtual marketplace trading platform on mobile phones. Following these successes, the brothers created the vision for a mobile payments company called bKash that could become one of the first of its kind globally to offer a major interoperable mobile payments service that is managed by neither a mobile operator nor a bank.[1]

The entrepreneurs were able to string together enough startup capital (including a grant in 2010 from the Gates Foundation made by former Program Officer Joyce Lehman) to hire a small team, utilize BRAC’s reach to build an agent network, and leverage BRAC Bank’s brand trust. bKash entered the market with their first services in 2011. We don’t have to tell the full “the rest is history” story. Many articles have since been published that discuss the success of bKash and the amazing growth the company has seen in just under three years in market – over twelve million registered customers, eighty-thousand agents distributed across the country, and over a million transactions processed per day. These figures place bKash second only to M-Pesa, the most recognized mobile payments deployment in the world. And with a population of 160 million in Bangladesh – compared to 43 million in Kenya – I suspect things will change within a year.

What is more remarkable about this story is the combination of individuals, organizations, and end-users – a very unique network - that made it all possible. None of these groups knew exactly what their specific role was in the beginning, but they all came with open minds and a singular focus: build a mobile payments network that would serve so many people that even the poorest people in Bangladesh could use it on a regular basis and at a low cost. These weren’t your typical deep-pocketed multinationals or venture capitalists taking on such a massive endeavor, either.

BRAC Bank was by no means one of the largest banks, and your average Bangladeshi wouldn’t recognize Kamal and Iqbal from the next guy on the street. And you certainly wouldn’t recognize the common, everyday consumers’ faces that represented bKash in advertisements. But you would absolutely take notice of this confluence of parties on bKash’s beautiful, understated billboards featuring a small fuchsia origami bird next to the large, singular face of someone you might have just passed on the street in Dhaka. And before we could blink the word bKash was being used across the nation – among the richest and the poorest - as a verb to describe money transfer. Businessmen were paying their drivers, urban laborers were remitting to families in rural towns, mothers were paying school fees – they all made up the first several thousand users on the network.

While our PRI is certainly a notable first for the foundation, it would never have happened without many other “firsts.” Bangladesh’s central bank issued its first mobile financial services license to a bank subsidiary along with the country’s first mobile financial services guidelines defining the roles of varying stakeholders. BRAC NGO helped build the bKash agent network with its first 7,000 mobile money agents. IFC became the first Series A investor in bKash.

I classify Kamal and Iqbal as firsts as well, and part of the old guard of Bangladeshi tech entrepreneurs. Today there is a small but thriving young crowd of new entrepreneurs, tech hubs, and startups that are just beginning to scratch the surface of solving some of Bangladesh’s biggest problems in health, transportation, education, and financial services. “The network is so new that I have nobody else to call, so I thought I would call you.”

Iqbal often jokes that shortly after he created GrameenPhone, an employee there got a phone call in the wee hours of the night from a total stranger, who was one of the first registered users on the network: “The network is so new that I have nobody else to call, so I thought I would call you.” Just as this anecdote likely resonates with the first bKash users in 2011, it resonates with me today as I seek out the nascent entrepreneur and technology startup environment in Bangladesh. If bKash serves as any evidence, the people of Bangladesh have a very exciting future to show to the world.

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